Partners' operating profit up nearly sixfold in quarter
Partners HealthCare, which runs Massachusetts General Hospital and Brigham and Women's Hospital, posted an operating profit of $28.9 million in the latest quarter, nearly six times its $4.9 million profit of a year earlier.
Partners also reported yesterday a huge jump in operating profit for the entire fiscal year, which ended Sept. 30. The hospital network's profit surged to $105.4 million, more than three times the organization's profit of $31.9 million in the prior year.
For the large Harvard Medical School teaching hospitals run by Partners, 2004 generally was a good year. Other Harvard hospitals also did well. Children's Hospital reported a profit yesterday, while this month, Beth Israel Deaconess Medical Center posted its first annual operating profit since its 1996 merger -- an estimated $37 million for the fiscal year.
Tufts-New England Medical Center and Boston Medical Center, which had losses for the first three quarters of the year, said they would release fourth-quarter and year-end results next month.
The nonprofit Partners, the state's largest hospital and physician network, also has cemented itself as the most financially successful. "It's a good jump," said Peter Markell, Partners' vice president for finance. "If you look at the hospitals around here, yes, we're doing better. But we're much larger than anyone else, and nationwide we're still low in terms of operating margin."
Much of the success stems from Mass. General, the largest hospital in the network and, like the Brigham, a Harvard Medical School teaching hospital. Mass. General earned an operating profit of $90 million in fiscal 2004, a 36.4 percent jump from $66 million in the prior year.
Mass. General's profits climbed partly because the hospital earned more than in the prior year in royalty income from commercial products created by its doctors. These include the arthritis drug Enbrel, which Mass. General AIDS researcher Brian Seed helped discover in the late 1980s, and a long-lasting material for making artificial joints discovered by Dr. William Harris and patented in the late 1990s.
Markell said a financial turnaround at Partners' North Shore Medical Center also boosted the organization's profits.
He said all the system's acute care hospitals were profitable in the recent fiscal year. The Brigham earned $38 million on operations, down 17.4 percent from $46 million. Faulkner Hospital earned $2.2 million, five times its previous annual profit of $440,000. North Shore Medical Center earned $2.4 million, reversing a $29.9 million loss. And Newton-Wellesley Hospital posted of $4.7 million profit, a 46.9 percent increase from $3.2 million the prior year.
Overall, Partners' net profit jumped to $232.4 million, more than three times 2003's net profit of $85.6 million. Net profit for the hospital network includes certain investment income and charitable gifts that operating profit does not. Net profit climbed partly because unrestricted gifts and interest from unrestricted gifts grew to $85 million, more than double the prior year. Unrestricted gifts are not earmarked for a specific medical program by the donor.
Partners' operating revenue surged 8.7 percent to $5 billion from $4.6 billion.
Children's Hospital posted a profit in the quarter and the year. Operating profit fell to $3.3 million for the last quarter, down 44.1 percent from $5.9 million for the year-ago quarter.
For the year, Children's posted a $19.6 million profit from operations, a 33.6 percent decline from $29.5 million in 2003. Spokeswoman Michelle Davis said the drop was partly due to the cost of building and operating the hospital's new research building on Longwood Avenue. Revenue shot up 12.1 percent to $778.5 million from $694.2 million.
Liz Kowalczyk can be reached at kowalczyk@globe.com.
